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Transport Infrastructure in Central and Northern Mozambique: the Impact of Foreign Investment on National Development and Regional Integration

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Transport Infrastructure in Central and Northern Mozambique: the Impact of Foreign Investment on National Development and Regional Integration OCCASIONAL PAPER NO 175 Economic Diplomacy Programme February 2014 Transport Infrastructure in Central and Northern Mozambique: The Impact of Foreign Investment on National Development and Regional Integration Sören Scholvin & Johannes Plagemann s ir a f f A l a n o ti a rn e nt f I o te tu sti n In rica . th Af hts Sou sig al in Glob African perspectives. ABOUT SAIIA The South African Institute of International Affairs (SAIIA) has a long and proud record as South Africa’s premier research institute on international issues. It is an independent, non-government think tank whose key strategic objectives are to make effective input into public policy, and to encourage wider and more informed debate on international affairs, with particular emphasis on African issues and concerns. It is both a centre for research excellence and a home for stimulating public engagement. SAIIA’s occasional papers present topical, incisive analyses, offering a variety of perspectives on key policy issues in Africa and beyond. Core public policy research themes covered by SAIIA include good governance and democracy; economic policymaking; international security and peace; and new global challenges such as food security, global governance reform and the environment. Please consult our website www.saiia.org.za for further information about SAIIA’s work. ABOUT THE ECONO MIC DIPLO MACY PROGRAMME SAIIA’s Economic Diplomacy (EDIP) Programme focuses on the position of Africa in the global economy, primarily at regional, but also at continental and multilateral levels. Trade and investment policies are critical for addressing the development challenges of Africa and achieving sustainable economic growth for the region. EDIP’s work is broadly divided into three streams. (1) Research on global economic governance in order to understand the broader impact on the region and identifying options for Africa in its participation in the international financial system. (2) Issues analysis to unpack key multilateral (World Trade Organization), regional and bilateral trade negotiations. It also considers unilateral trade policy issues lying outside of the reciprocal trade negotiations arena as well as the implications of regional economic integration in Southern Africa and beyond. (3) Exploration of linkages between traditional trade policy debates and other sustainable development issues, such as climate change, investment, energy and food security. SAIIA gratefully acknowledges the Swedish International Development Cooperation Agency, the Danish International Development Agency, the UK Department for International Development and the Swiss Development Corporation, which generously support the EDIP Programme. Programme head: Catherine Grant, [email protected] © SAIIA February 2014 All rights are reserved. No part of this publication may be reproduced or utilised in any form by any means, electronic or mechanical, including photocopying and recording, or by any information or storage and retrieval system, without permission in writing from the publisher. Opinions expressed are the responsibility of the individual authors and not of SAIIA. Please note that all currencies are in US$ unless otherwise indicated. ABS TRACT Numerous major projects are underway or in the pipeline in the energy and mining sectors in central and northern Mozambique, but transport infrastructure is inadequate. As a result, foreign companies themselves have begun to upgrade public roads, railways and harbours. International donors and the Mozambican authorities are optimistic about the impact of these initiatives on national development, and claim that the rehabilitation of the ports of Beira and Nacala, and the transport corridors that connect them to Mozambique’s landlocked neighbouring countries, will also bolster regional integration. Yet reports by civil society organisations (CSOs) and parallels with resource exploitation in the colonial era suggest that this assessment may be incorrect. We analyse the present state of transport infrastructure in central and northern Mozambique as well as its envisaged expansion, shed light on the co-operation between foreign companies and the Mozambican government in respect of national infrastructure, and investigate the potential impact of this new trend on national development and regional integration. A BOUT THE A UTHORS Dr des. Sören Scholvin is a research fellow of the Institute of Economic and Cultural Geography at the Leibniz-Universität Hannover, and an associate researcher at the GIGA German Institute of Global and Area Studies in Hamburg, Germany. His research interests include the energy policy of emerging powers, regional economic integration in South America and sub-Saharan Africa, and transport infrastructure in sub-Saharan Africa. Dr Johannes Plagemann is a political scientist and a researcher at the GIGA German Institute of Global and Area Studies in Hamburg, Germany. His research interests include political developments in Mozambique, the transformation of sovereignty in emerging powers, and cosmopolitanism. ECONOMIC DIPLOMACY PROGRAMME ABBREVIATIO NS AND A C RONYMS CDN Corredor de Desenvolvimento do Norte (Northern Development Corridor) CFM Companhia de Ferros de Moçambique (Mozambican Iron Company) CMC Cooperativa Muratori e Cementisti Comesa Common Market for Eastern and Southern Africa CSO civil society organisation DBSA Development Bank of Southern Africa DRC Democratic Republic of Congo EAC East African Community EN1 Estrada Nacional 1 (National Highway 1) EN7 Estrada Nacional 7 (National Highway 7) ENRC Eurasian Natural Resources Corporation Frelimo Frente de Libertação de Moçambique (Mozambique Liberation Front) GDP gross domestic product LAM Linhas Aéreas de Moçambique (Mozambican Airlines) PIDA Programme for Infrastructure Development in Africa (African Union) Renamo Resistência Nacional Moçambicana (Mozambican National Resistance) SADC Southern African Development Community SDI spatial development initiative TEU twenty-foot equivalent unit UAFL United Africa Feeder Line ZANU Zimbabwe African National Union SAIIA OCCASIONAL PAPER NUMBER 175 4 TRANSPORT INFRASTRUCTURE IN CENTRAL & NORTHERN MOZAMBIQUE INTRODUCTION ‘This small town is trying to handle massive expansion. It must have been like this in Johannesburg during the gold rush.’ – South African banker, speaking about Tete in central Mozambique. uring the past few years, central and northern Mozambique has become an DEl Dorado, with a plethora of projects proposed for the energy and mining sectors. The giant Brazilian company Vale and its Australian counterpart Rio Tinto plan to export 44 million tonnes of coal a year from Tete province – much of it coking coal, which is used in steel production and is more valuable than thermal coal. Vale, Rio Tinto, the Indian company Jindal Steel & Power, and the London-based Kazakh mining company Eurasian Natural Resources Corporation (ENRC) are planning to build coal-fired power stations with capacities ranging from 300 to 3 000 megawatts. Ncondezi Coal, one of the few Mozambican players involved, wants to operate a coal-to-liquids plant. The Australian mining company Global Metals plans to build a heavy rare earth mining and processing plant east of Tete. At least one additional hydroelectric dam is scheduled along the Zambezi River, and Cahora Bassa’s output is due to be increased by more than 2 000 megawatts.1 In Nampula province, the Irish company Kenmare Resources wants to mine 612 000 tonnes of ilmenite, 24 000 tonnes of zircon and 12 500 tonnes of rutile a year, potentially contributing up to 2.4% to Mozambique’s gross domestic product (GDP).2 Near the Tanzanian border, other minerals and natural gas are to be mined in huge quantities. However, existing transport infrastructure cannot sustain these developments. As a result, foreign companies have begun to build infrastructure which they regard as essential for their operations. It could be argued that their efforts to upgrade transport infrastructure resemble projects implemented by the colonial powers about 100 years ago, which linked mining towns to harbours, fragmented East and Southern Africa, and did not benefit local people. Protests over relocations due to mining in Tete province, insufficient compensation and limited job opportunities for local communities, as reported by Human Rights Watch,3 appear to confirm this negative interpretation. A report by the Mozambican Centre for Public Integrity suggests that foreign mining companies create few jobs, but make huge profits.4 Even the World Bank has warned against the environmental impact of strip mining and coal-fired power generation. It has also noted that Rio Tinto’s concession in Benga will require the relocation of some 2 000 people, and that 1 313 families and 60 businesses are due to be moved from Vale’s Moatize site.5 Other observers are more positive. They highlight the coincidence of coal and hydropower resources, which could be used to generate huge quantities of cheap power, and metals mining and processing opportunities, which require a lot of electricity.6 They note that foreign investment has led to the rehabilitation of road, rail and harbour infrastructure damaged during Mozambique’s civil war, as well as its expansion.7 Mozambique’s former minister of transport, Paulo Zucula, recently said the infrastructure built by foreign companies was beneficial to everyone, and that its purpose went beyond facilitating exports.8 Given these divergent interpretations, we examine the issue of whether transport
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